When entrepreneurs start a new company, one of the first things they’ll have to consider is the kinds of advertising they’ll need to employ. Issues you might consider include how much you should spend, competitor advertising, and where to spend it. Small business advertising statistics can provide guidance and inspiration.
Crafting a strategy to get the word out about a new business or improving brand awareness can be challenging. These 16 statistics will help you gauge advertising effectiveness and plan where best your dollars can be spent.
The difference between advertising and marketing: Advertising and marketing are frequently used interchangeably, though this is an error. Marketing describes the totality of a business’ activities to build, grow, and maintain brand presence—including activities such as logo design, content marketing, and crafting a brand strategy. On the other hand, advertising refers specifically to the placement of promotional materials in third-party media outlets.
Small Business Advertising Budget Statistics
Many owners determine the amount they spend on advertising and marketing based on how much they perceive they can afford. That is to say, they spend as little on advertising as possible, with some small businesses investing virtually no money in advertising. According to HubSpot, the average small business invests 8.7% of gross revenues in advertising.
How much businesses spend varies wildly by industry and service area. According to Small Business Trends, restaurants spend an average of 1.9% on advertising, while furniture stores spend more than twice, investing 4% of revenues in promoting their products. HubSpot reports advertising spend is increasing, with 47% of businesses reporting they’ll spend more this year than last.
Whether these levels of spending are enough to accomplish your goals is debatable, though. Anecdotally, the rule of thumb is to invest about 10% of gross revenues on advertising. This is borne out by Gartner’s 2023 CMO Report, which finds large and small businesses are spending a combined average of 9.1% of revenues on advertising and marketing.
Where Small Businesses Advertise & Why
Available avenues for advertising are continually evolving, with new technologies and new outlets popping up all the time. Where small businesses advertise and why have changed tremendously over the last 20 years—gradually transitioning from traditional offline media like newspapers and television to online avenues via social media and pay-per-click (PPC) programs. Here’s a look at four broad categories of advertising:
- Broadcast: Ads placed with outlets that distribute content via television, radio, or digital downloads like podcasts and streaming music
- Print: Ads that appear in advertising-supported newspapers and magazines
- Display: Billboards, transit advertising, and other static public ads such as posters in restaurant bathrooms
- Online: PPC ads, Google AdSense, banner ads, and paid ads on social media
Take a look below at how businesses are spending on each of these kinds of advertising.
Small Business Broadcast Advertising Statistics
Prior to streaming, watching television was a linear activity—you sat down to watch a program at a set time and you watched the content on the screen as it was broadcast, with no ability to pause, rewind, or fast forward. In recent years, streaming services like Netflix and Spotify have changed all that. According to CNN, 2023 marked the first year in which linear television viewing fell below 50% of all television usage.
That’s a huge decline, considering that TiVO, the first mainstream digital video recorder (DVR), wasn’t introduced until 1999. To say there has been a titanic shift in viewership habits is an understatement. A recent report in entertainment trade magazine Variety highlighted the impact of this shift. Warner Bros. Discovery, the parent company of networks like NBC and CNN, saw a 13% decline in advertising revenue in 2023 while Paramount Global, CBS’s parent company, lost 14% of ad revenues.
Paradoxically, as linear television viewership declined, the cost of advertising on television skyrocketed. Statista reports a 25% increase in television advertising spending since the introduction of TiVO, as spend grew from $55 billion in 2000 to more than $69 billion today.
Even as television viewership is on the decline, the cost of TV ads and the amount businesses are spending on them continues to climb. Television may be less important than it was 20 years ago, but it’s still a valuable medium as evidenced by the increasing costs. Make plans to include television in your advertising plan, especially if your competitors are on the tube.
Print Advertising Statistics for Small Business
As has happened with television, the consumption of print media has plummeted—in no small part to the transition to online media. More people get their news from online sources today than they do from newspapers and magazines. A recent Pew Research report determined newspaper circulation fell between 8% and 10% year-over-year, while online news consumption increased more than 21%.
Readership decline has dramatically impacted newspaper advertising revenues, with the industry seeing a global decline of 72.7% since 2000. Nevertheless, newspapers remain one of the most effective advertising media based on customer trustworthiness. Some 82% of customers express trust in print ads.
As print media continues to decline, it will become progressively less relevant to small businesses. However, at this time, because of the trust factor, it remains an important part of your advertising budget.
Billboards for Small Businesses
Billboards may seem like a tired, old media source, but this is anything but true. Billboards represent one of the cheapest forms of reaching a mass audience when measured by cost-per-impression (CPI).
Billboard Cost | x 1000 | = | Cost per Impression (CPI) |
Number of Impressions |
Calculating CPI is relatively straightforward, and it’s an important measure in virtually every form of advertising. Results are expressed in thousands of views. Billboard advertising typically costs between $2 and $9 per thousand impressions, meaning you can reach an individual customer for as little as two-tenths of a cent! Compare this to television, which Solomon Partners pegs as a range between $10 and $45.
Online Advertising Statistics for Small Businesses
In spite of the collapse of television and newspaper audiences and the decline in advertising spending in those media, advertising spending has surged more than 14% since 2000, with businesses dropping roughly $375 billion hawking their wares in 2024. So where is that money going? The answer is online. Globally, businesses drove digital advertising to a new record, clocking a 3.9% increase year-over-year in 2023.
Overall, online advertising accounts for 62% of total small business ad spend in 2023. These dollars are spread across web and social media, with primary outlets being Google Ads, AdSense, and Facebook. More than 38% of small business owners single out Facebook as the most effective social media platform, while Google paid search ads produce a 1.58% higher conversion rate than organic search leads.
An ever-increasing number of consumers are shifting their attention online. As the trends continue in that direction, small business owners should be prepared to increase the percentage of ad spend they put toward online efforts. They should also prepare for costs to increase as well, as more advertising moves online and prices rise with demand.
Frequently Asked Questions (FAQs)
How much should I spend on small business advertising?
Advertising spend—the amount a business invests in advertising—is calculated as a percent of gross revenues. Depending on the industry, the average small business ad spend ranges from less than 2% of revenues to more than 10% of revenues. Ultimately, only you can determine how much you can afford to spend. However, a good rule of thumb is between 8% and 10% of gross revenues.
Why should I spend money on small business advertising?
There are two answers to this question: you can’t reach your customers effectively without investing in advertising, and your competitors are spending money on advertising. The primary job of advertising is to inform customers about the products and services you offer. Your competitors are telling people they offer similar products and services, and when a potential customer decides to buy, they’ll go to the business they’re most familiar with.
What is the most important type of small business advertising?
Advertising has changed over the years, moving from newspapers to television and, ultimately, online. Today, small businesses spend the majority of their advertising budgets online, specifically on Google Ads and pay-per-click (PPC) ads on Facebook, Instagram, and TikTok. For most small businesses, the most important type of small business advertising will be online.
Bottom Line
Advertising your small business will be one of the most important activities you undertake, just shy of the importance of providing excellent service or products to your customers. Taking the time to understand these small business advertising statistics can give you a deeper understanding of both the hows and whys of advertising your business. You’ll make better decisions and craft more effective strategies, maximizing your marketing dollars.
